As of the signing date of this prospectus, the company has 74 patents, including 25 invention patents, and has won the Shandong Province Science and Technology Progress Award 3 times and the China Textile Industry Patent Award Excellence Award 3 times.

After several years of silence, the "richest man in Yantai" Song Zuowen and his "Nanshan Empire" who were involved in corruption cases have once again returned to people's sight.

Compared with Nanshan Zhishang, its controlling shareholder is Nanshan Group, one of China's top 500 companies and one of China's "largest" village-run enterprises. As early as the last century, the average household assets of the villagers in Nanshan Village, where it is located, had exceeded 1 million yuan, and it was considered to be the "second village in the world" after Huaxi Village.

Nanshan Group holds a total of approximately 93.1% of Nanshan Zhishang’s shares directly and indirectly, and is the controlling shareholder of Nanshan Zhishang. It is also one of the largest township collective-owned enterprises in China. In 2019, its comprehensive strength ranked 176th among the top 500 Chinese enterprises. The shareholders behind it, Nanshan Village Committee and Yantai’s richest man Song Zuowen, hold 51% and 49% of the shares respectively. The

prospectus shows that from the perspective of technical strength, Nanshan Zhishang occupies a place in the domestic textile field. It is a national high-tech enterprise and a textile technology innovation demonstration enterprise recognized by the China Textile Industry Federation. It has participated in the formulation of national standards in the textile field many times. and industry technical standards. As of the signing date of this prospectus, the company has 74 patents, including 25 invention patents, and has won the Shandong Province Science and Technology Progress Award 3 times and the China Textile Industry Patent Award Excellence Award 3 times. The prospectus of

also shows that there are many related transactions with the parent company Nanshan Group in terms of operations, and there are many counterparty loans with Nanshan Group's credit companies, and its financial and business "independence" is questionable.

It is worth noting that in recent years, Nanshan Group and Song Zuowen have been involved in many "illegal" cases. It is still unknown whether this will have a negative impact on Nanshan Zhishang's IPO. According to public documents, former chairman Song Zuowen was exposed to two "bribery cases".

Regarding the above matters, the Beijing News Shell Finance reporter contacted Nanshan Group and Nanshan Zhishang for an interview. As of press time, no further response has been received.

Nanshan Zhishang, a subsidiary of Yantai's richest man, is about to go public. Nanshan Group is its controlling shareholder.

Nanshan Zhishang is a subsidiary of Shandong Nanshan Group. It was formerly known as Longkou City Donghai Textile Co., Ltd. and was registered and established on April 29, 2007. , in December 2019, it was transformed into a joint-stock company through joint-stock system reform. The company's main business is worsted woolen fabrics and clothing.

From 2017 to 2019, Nanshan Zhishang achieved operating income of 1.66 billion yuan, 2 billion yuan and 1.77 billion yuan respectively. Net profits attributable to parent companies were 92.05 million yuan, 121 million yuan and 122 million yuan respectively. If non-recurring gains and losses are deducted, the actual net profits attributable to the parent company are 94.53 million yuan, 116 million yuan and 109 million yuan respectively.

Compared with Nanshan Zhishang, its controlling shareholder, Nanshan Group, which is one of China's top 500 companies and one of China's "largest" village-run enterprises, is more well-known.

Nanshan Group was formerly a village-run enterprise in Qian Songjia Village, Dongjiang Town, Longkou City, Yantai City in 1979. Past public reports show that Song Zuowen started his business by selling wood in his early years, and later founded local cotton spinning mills and other businesses. In 1988, Song Zuowen was elected as the village party secretary of Qian Song Village as the "leader" in getting rich. Nanshan Qian Song Enterprise Group Corporation was restructured and established on the basis of the above-mentioned factory.

Since then, the territory occupied by Qian Song Village has continued to expand, and was later renamed to become Nanshan Village. According to local media reports in Shandong, as early as the last century, the average household assets of Nanshan Village exceeded 1 million yuan, and it was considered to be the only village in Nanshan Village. Second to Huaxi Village, it is the "Second Village in the World".

At the same time, Nanshan Qiansong Enterprise Group is also constantly expanding, starting from the textile industry and aluminum profiles to dozens of other industries. In 1992, Nanshan Qiansong Enterprise Group was restructured and renamed Nanshan Group Co., Ltd. , referred to as Nanshan Group.

After 40 years of development, today's Nanshan Group has grown into a "Big Mac" business empire. It directly controls 35 first-level subsidiaries, and its business scope covers electrolytic aluminum, textiles and apparel, petrochemicals, real estate, The total number of employees in aviation, finance, education, tourism and many other industries exceeds 40,000. In 2019, Nanshan Group's operating income was 43.46 billion yuan and net profit was 3.455 billion yuan. Its comprehensive strength ranked 176th among the top 500 Chinese enterprises and 74th among the top 500 Chinese manufacturing companies.

Song Zuowen's family also achieved a great fortune during the development of Nanshan Group. In 2010, Song Zuowen became the richest man in Shandong with a wealth of 39.6 billion (listed by " Shandong Business Daily "); in the 2019 Hurun Report, he was ranked the richest man in Shandong. , Song Zuowen's family ranks third in Shandong and first in Yantai with a net worth of 30 billion yuan.

From the perspective of equity structure, Nanshan Group is controlled by the Nanshan Village Committee (51% shareholding ratio). It is understood that in terms of corporate management, the actual power has always been held by Song Zuowen, who has been the director of the village committee for a long time. Before 2015, Song Zuowen had been the chairman of Nanshan Group. After Song Zuowen resigned, Song Jianbo, Song Zuowen's son, took over from his father as the chairman of the group.

Currently, the main revenue pillar of Nanshan Group is the aluminum industry. As early as 1999, its "core subsidiary" Nanshan Aluminum had taken the lead in completing the listing. Its main business is the production and sales of electrolytic aluminum and related products. In 2019, the company achieved total operating income of 4.95 billion yuan, net profit attributable to the parent company of 320 million yuan, and the latest total market value of nearly 28 billion yuan.

This time, Nanshan Zhishang represents the operation of the textile sector of Nanshan Group. The business sector is divided into two parts: worsted woolen business and clothing business. In recent years, the revenue of the two has been roughly equal.

Looking at the specific ownership structure, Nanshan Group directly holds 90% of the shares of Nanshan Zhishang, and indirectly holds about 3.075% of the shares of Nanshan Zhishang through its subsidiary Longkou Xiangruida. In total, it holds 93.1% of the shares of Nanshan Zhishang, which means it has absolute Control. The remaining individuals and companies hold the remaining shares. The reporter noticed that the registered addresses of the two major institutional shareholders outside Nanshan Group, Longkou Xianruida and Longkou Shengjing, are in Nanshan Village, Longkou City.

Overseas markets are shrinking and development has encountered bottlenecks. How will Nanshan Zhishang go public at this time?

As a traditional textile and apparel company, the main problems faced by Nanshan Zhishang are excessive competition in the domestic market and the performance ceiling caused by the sharp shrinkage of foreign markets. The prospectus of

shows that Nanshan is a leading enterprise in domestic worsted woolen fabrics and formal professional attire. "Nanshan" brand worsted woolen fabrics and "Dilma" brand professional attire have been recognized as well-known trademarks in China by the State Administration for Industry and Commerce . The company is a single champion demonstration enterprise for combed wool woven fabrics, and its "Dilma" brand professional clothing has been rated as "China's Top Ten Professional Clothing Brands" and "China's Clothing Growth Brand".

However, judging from the performance of the past three years alone, "Nanshan Zhishang", which ranks among the top companies in the industry, seems to have encountered a bottleneck.

From 2017 to 2019, Nanshan Zhishang’s total operating income was 1.66 billion yuan, 2.00 billion yuan, and 1.77 billion yuan respectively, and the net profits attributable to the parent after deducting non-profit items were 94.53 million yuan, 116 million yuan, and 109 million yuan respectively. Its revenue and profit both declined year-on-year in 2019.

Nanshan Zhishang's income pillar can be divided into two major segments-worsted woolen and apparel business segments (the revenue ratio of the two in 2019 is approximately 1:1). The apparel segment is divided into four types: suits, shirts, garment processing, and other apparel. From a business analysis, Nanshan Zhishang's performance decline in 2019 was mainly caused by the decline in clothing business revenue, and whether it was "high-end" suits or low-end shirts and clothing processing, the decline was quite obvious. The

prospectus shows that in 2019, Nanshan Zhishang’s suit business sales amounted to 644 million yuan, down 17% year-on-year; shirt sales amounted to 104 million yuan, down nearly 8% year-on-year; clothing processing revenue fell 16% year-on-year. In the

prospectus, Nanshan Zhishang only explained the reasons for the decline in suit business revenue: In 2019, the company increased the pricing of suit products and reduced the acceptance of low-price orders. At the same time, under the influence of factors such as the professional attire procurement cycle of large domestic customers, production and sales declined. The volume decreased compared with 2018, resulting in a 16.99% decrease in suit revenue.The sales volume of

declined and the market shrank, which was transmitted to the production end and the capacity utilization rate declined. Especially in the suit business, the capacity utilization rate dropped directly from 108.13% to 88.23%.

If these are only temporary risks, then in the long run, the prospects of the textile and apparel industry are also not promising.

From the perspective of the international market, due to changes in the international political and economic environment, national export tax rebate policies and many other uncontrollable factors, the company's revenue from overseas export business has also shrunk sharply in recent years. From 2017 to 2019, the company's overseas income accounted for 34.78%, 29.66% and 28.97% of its operating income respectively. The prospectus also hints at this part of the risk.

In addition, Nanshan Zhishang clearly stated that the textile and apparel industry has the characteristics of technology-intensive, capital-intensive, and labor-intensive. These characteristics determine the obvious trend of polarization in industry competition, with a large number of small and medium-sized enterprises competing in the field of mid- and low-end products. The competition is fierce, and only a few companies have the ability to enter the high-end product field to participate in high-level comprehensive competition.

So, in the face of the continuous decline in the above-mentioned business revenue, is the company really ready to expand against the trend at this time? The

prospectus shows that Nanshan Zhishang plans to use the 690 million funds raised this time for three projects - an intelligent upgrade project for worsted wool production lines, an intelligent clothing manufacturing upgrade project, and an R&D center upgrade and construction project. Among them, the smart upgrading project of worsted wool production line has the largest investment, estimated at 537 million yuan.

According to the plan, after the completion of several major projects, Nanshan Zhishang's main production capacity will be further expanded. Among them, the production capacity of worsted woolen fabrics will increase from the current approximately 16 million meters/year to 17.5 million meters/year, and the output of suits will increase from 176,000 meters to 17.6 million meters per year. sets/year will increase to 180,000 sets/year; shirt output will increase from 457,400 pieces/year to 500,000 pieces/year.

However, the problem is that after the project is completed, how can the company ensure that these new production capacities can be absorbed as expected? In the prospectus, the company also mentioned this risk, but did not provide a clear answer to the above question. Later, the Beijing News Shell Finance reporter sent another letter to inquire about Nanshan Zhishang’s Secretary-General’s Office, but as of press time, there had been no further response.

has many related transactions, and Nanshan Finance often "transfuses blood" for it. Is the finance independent?

As one of the many companies under Nanshan Group, Nanshan Zhishang relies on Nanshan Group for "food, clothing, housing and transportation", "business transactions" and even "fund lending". The

prospectus shows that Nanshan Zhishangguang sells clothing and provides labor services to more than 70 units controlled by Nanshan Group or other related companies (including schools, hospitals, etc.), and most of these companies are in Song Zuowen. Family or Nanshan Group. In 2019, the total amount of these transactions was 9.9409 million yuan, accounting for 0.56% of the current operating income.

Another major part of related transactions is related purchases.

From 2017 to 2019, the total amount of goods and services purchased by the company from Nanshan Group, Nanshan Aluminum , Nanshan Water Affairs, Nanshan Hotel and other enterprises was 81.84 million yuan, 86.3312 million yuan and 86.2734 million yuan respectively, accounting for the operating costs of each period. The proportions are 7.40%, 6.38% and 6.98% respectively. Among these costs, electricity, natural gas, steam, heating, water and sewage treatment costs account for about 80% of related procurement costs.

In addition to related transactions, the greater hidden concern comes from the financial business transactions with Nanshan Group and related companies.

Shell Finance reporter found that Nanshan Group has repeatedly played the role of loan guarantor for Nanshan Zhishang. In recent years, almost every loan of Nanshan Zhishang has been guaranteed by Nanshan Group (how many times in recent years?). Take the latest guarantee disclosed in the prospectus as an example. The guarantee occurred on November 30, 2019, the loan period is from November 30, 2019 to November 27, 2020, and the guarantee amount is 35 million yuan. In addition, Nanshan Group Finance Co., Ltd. (referred to as "Nanshan Finance"), a subsidiary of Nanshan Group, also opened acceptance bill business for Nanshan Zhishang. Since December 2018, a total of 120 million yuan has been issued for acceptance bills.

In addition, Nanshan Zhishang also frequently conducts financial business such as deposits and loans with the above-mentioned Nanshan Finance Company.

In December 2008, Nanshan Group, Nanshan Aluminum , and Haier Group Finance Co., Ltd. jointly established Nanshan Finance.The profile of Nanshan Finance Company reads: A non-bank financial institution that provides financial services to member units for the purpose of improving the group's capital utilization efficiency, reducing comprehensive financial costs, and improving capital and financial management levels.

For Nanshan Zhishang, Nanshan Finance seems to play the role of "bank".

In addition to the above-mentioned bill issuance business for the company, Nanshan Finance has also provided deposit and loan services for Nanshan Zhishang many times since 2018. Specifically, during the year from August 2018 to August 2019, Nanshan Zhishang took out 6 loans from the Nanshan Finance Office, with a total amount of 440 million yuan; and since 2018, Nanshan Zhishang has also successively deposited Nanshan Finance made two payments totaling 1.05 billion yuan.

Shell Finance reporter discovered that there are personnel crossovers between Nanshan Zhishang and Nanshan Finance. Cheng Rence, vice chairman of Nanshan Zhishang, also serves as a director of Nanshan Finance.

In summary, it can be seen that Nanshan Zhishang relies on orders from affiliated companies and the factory and supporting basic services provided by the parent company for the first part of its operations, and it is not "independent" financially.

Regarding the above-mentioned related transactions, both the Nanshan Village Committee and Song Zuowen stated that they would "not use the actual controller's status and controlling influence to seek the company's rights superior to third parties in the market in terms of business cooperation and other aspects; not use the actual controller position and controlling influence to seek preferential rights to conclude transactions with the company; do not conduct transactions with the company on terms that are unfair compared with market prices, nor use such transactions to engage in any behavior that harms the interests of the company; minimize conflicts with the company Related transactions.

However, the prospectus did not mention how Nanshan Zhishang would avoid the risks caused by this part of "fund transactions." In response to this matter, the Beijing News Shell Finance reporter sent an email to the Secretary's Office of Nanshan Zhishang. In the interview letter, the company responded that it would organize personnel to respond as soon as possible on August 3. As of press time, the Beijing News reporter had not received a reply.

Yantai’s richest man has been involved in many “corruption cases.” Recently, Nanshan. The group was reported again

In the early years, Nanshan Group, led by Song Zuowen, led the villagers to get rich and was once regarded as an advanced model. Public information shows that in recent years, Nanshan Group has been exposed to be involved in many illegal cases, which has cast a shadow on Nanshan Group. It is unclear whether this will affect the passing of Nanshan Zhishang. Song Zuowen, the leader of

Nanshan Group, was involved in "bribery cases" twice. In September 2014, the verdict of Liu Tienan, the former deputy director of the National Development and Reform Commission. It shows that Song Zuowen paid bribes to Liu Tienan three times, totaling 7.54 million yuan; on June 19, 2017, the Shandong High Court also mentioned in a ruling on the corruption case of Du Weiping, the former director of the Yantai Municipal Planning Bureau, that Song Zuowen also He once paid bribes to Du Weiping, and Song Zuowen admitted the matter in court.

Liu Tienan's case once caused public opinion to question Song Zuowen himself. However, judging from public information, Song Zuowen has not been legally punished for this matter.

After that, the earlier corruption case of Nanshan Group was exposed again. According to the Beijing News report in April 2019, between March and May 2006, Li Dongguang, the former vice president of China Aluminum Co., Ltd. He once accepted the request from Cheng, the general manager of Nanshan Group in charge of industrial enterprises, and took advantage of his position to provide assistance to Chinalco International Trade Company for related business of Nanshan Group. He accepted three Agricultural Bank of China cards from Cheng three times, in total. RMB 420,000. The incident ended with the company announcing active rectification.

Shell Finance reporters learned through interviews that in addition to the above-mentioned cases, Nanshan Group had many disputes over land with other villages, causing considerable controversy in the local area. This fact has been reported by the media before. Around July 30, local people in Longkou City told reporters that in 2013, Nanshan Group had forcibly expropriated land in the local area and the corresponding compensation measures were not in place.

Mu Wei, the owner of a local business called Yantai Baijia Aquatic Products Co., Ltd., told reporters that in May this year, Nanshan Group personnel secretly mined and illegally dug 200,000 cubic meters of river sand in the factory of Baijia Aquatic Products Company.Regarding the illegal excavation of river sand, the relevant documents issued by the Longkou City Natural Resources and Planning Bureau provided by Mu Wei showed that the mining of sand by a subsidiary of the Nanshan Group was without approval, and the Longkou City Natural Resources and Planning Bureau had issued an "Order to Stop Illegal Violations" "Conduct Notice" and file a case for investigation and punishment in accordance with the law.

Regarding the outcome of the incident, the Beijing News Shell Finance reporter called the Longkou Municipal Natural Resources Planning Bureau on July 31. The person who received the call said that they would contact the reporter after the incident was verified, but as of press time, the reporter had not received a reply.

Will the above negative events have a negative impact on Nanshan Zhishang's IPO? Regarding this matter, the Beijing News Shell Finance reporter also sent a letter to Nanshan Zhishang for an interview, but has not yet received a reply to the relevant questions.

Parent company Nanshan Group's interest-bearing liabilities reached 44.3 billion at the end of last year. Corporate bonds are facing intensive redemptions and high-quality assets are being sold.

Shell Finance reporters noticed that Nanshan Group's corporate bonds are facing intensive redemptions.

Since the end of 2019, when corporate bonds issued within Nanshan Group were sold off intensively in the secondary market, rumors about Nanshan Group’s liquidity crisis have not stopped.

On December 20, 2019, Nanshan Group issued an announcement on the results of the sell-back implementation of "18 Nanshan 05". It showed that for this corporate bond issued in January 2019, most investors chose to require the company to sell back the issuance of the bond. The amount was 500 million yuan, but the resale amount reached 450 million yuan. This means that the market is not optimistic about Nanshan Group's bond redemption.

Or in order to return funds, also in December last year, Nanshan Group initiated a huge asset transfer agreement. It signed an agreement with Qingdao Urban Construction Investment (Group) Co., Ltd., a subsidiary of Qingdao State-owned Assets Supervision and Administration Commission, and planned to transfer nearly 6.9 billion yuan. price, and transferred its related aviation and other assets to Qingdao Urban Investment.

These assets include many high-quality assets, including Qingdao Airlines , Nanshan Business Jet , Shandong Nanshan International Flight Co., Ltd.'s equity and related net debts, as well as two business jets and the north tower of Qingdao Nanshan Grand Mercure Resort Hotel House ownership and corresponding land use rights.

Behind this is Nanshan Group facing a new round of redemption. On July 24, Nanshan Group announced that there was a corporate bond "17 Nanshan 02" with a valid registration number of 499,500 lots sold back, a sell-back amount of 500 million yuan, and the redemption redemption date on August 14. Judging from the resale results of "17 Nanshan 02", the resale amount reached 499.535 million yuan, which means that almost all investors chose to sell back.

Nanshan Group's 2019 annual report shows that as of the end of 2019, the company's interest-bearing liabilities reached 44.3 billion yuan, of which short-term debt was 22.409 billion yuan and long-term debt was 21.901 billion yuan. Nanshan Group's interest-bearing liabilities have been increasing year by year in recent years, from 20.738 billion yuan in 2012 to 44.31 billion yuan in 2019, more than doubling. The huge scale of debt has seriously dragged down the company's profitability. In 2019, Nanshan Group achieved revenue of 43.461 billion yuan, a year-on-year increase of 0.67%, and net profit attributable to the parent company of 2.445 billion yuan, a year-on-year increase of 17.1%.

Based on the above background, does the listing of Nanshan Zhishang at this time hide the purpose of the parent company's eagerness to use the IPO of the subsidiary company for blood transfusion?

Regarding these questions, the Beijing News Shell Finance reporter also called the company and sent letters to the company to try to get answers, but so far no specific response has been received.

Nanshan Zhishang has not paid social security for some employees. The company claimed that it was at the request of employees.

Finally, the prospectus shows that Nanshan Zhishang also failed to pay social security for its employees. As of December 31, 2019, Nanshan Zhishang had paid social security for its employees. The number of employees covered by insurance is 4,333, and the proportion of social insurance payment is 76.15%; the number of employees paying housing provident fund is 3,755, accounting for 65.99%.

Nanshan Zhishang said that the company’s employees are mainly people with rural household registration, and some rural employees are unwilling to bear the personal contributions of the “five insurances and one fund” and require the issuer and its subsidiaries not to pay the “five insurances and one fund” for them. gold". As of now, there are no disputes or disputes between Nanshan Zhishang and its employees due to failure to pay social insurance and housing provident funds.

Shell Finance reporter Peng Shuo Li Yunqi editor Yue Caizhou proofread Liu Baoqing